Why are ponzi schemes illegal?

Originally posted by Crakeur
reply to post by Signals

 

they're all illegal. the banking system, social security etc are not ponzis, even if they resemble them. (ok, social security probably is)

There's a fine line there.

Banks loan out money they don't physically have in their vault. That sounds like a ponzi scheme to me.

reply to post by Signals


as I said in a prior post, in theory, the banks are supposed to have your money at all times. walk into a bank and ask for your cash. they will give it to you. walk into Bernie Madoff's office and ask for your money and he'll tell you, you take it out, you're done.

reply to post by Crakeur


Yes, but that's where theory meets reality. It depends on how much you request to withdraw. Banks obviously do not carry an endless supply of cash on hand, so they may delay you by having to get more from other
banks. We've all heard the ultimate "get back at the man" plan, ie. everybody try to withdraw all of their money at once. It would never happen but anything is possible....and if it did they wouldn't have even close to half of the cash on hand to handle the requests.

(because it doesn't exist )

But I digress. Thanks for everyone's participation, especially yours, hopefully my question is understood.

reply to post by Signals


actually, that has happened to banks. Lines of people waiting to get their coin before they run out.

if you ask your bank for your funds and they don't have enough on hand, you'd be dealing with a rather large sum and, in that case, you'd probably wantbank check which would not be your actual cash but it should be good for depostiing elsewhere